Administrative Penalties for Corporate Income Tax (CIT)

In a previous article dated 15 October 2018, it was noted that SARS will be imposing administrative penalties from December 2018 for outstanding Corporate Income Tax (CIT) returns.

Administrative penalties will be imposed on companies that receive a final demand to submit a return. In terms of Section 210 of the Tax Administration Act of 2011, noncompliance with regards to non-submission of required CIT returns may be subjected
to a penalty. Since then SARS has published a public draft document for comment in anticipation of the penalties to be imposed as from 01 December 2018. The document was published at short notice with a deadline for comment of 31 October 2018.

The document is titled:

“INCIDENCES OF NON-COMPLIANCE BY A PERSON IN TERMS OF SECTION 210(2) OF THE TAX ADMINISTRATION ACT, 2011 (ACT NO. 28 OF 2011) THAT ARE SUBJECT TO A FIXED AMOUNT PENALTY IN ACCORDANCE WITH SECTION 210 AND 211 OF THE ACT”

Financial Managers and business owners are advised to acquaint themselves with the detail of the draft public document as well as the content of Sections 210 and 211 of the Tax Administration Act #28 of 2011, as amended, as well as Interpretation Note Number 68 (Issue 2) and consult with their Tax Practitioners where needed.

Note that several amendments were made to the Tax Administration Act (and linked to other Acts) and may be found on the SARS web-link www.sars.gov.za/Legal/TaxAdmin/Pages/default.aspx.

The Tax Administration Act came in to effect in October 2012.

Penalties are imposed on the basis of:

  • Failure by a company to submit an income tax return as and when required under the Income Tax Act for years of assessment ending during the 2009 and subsequent calendar years, where SARS has issued that company with a final demand, referring to this notice and requiring the submission of the outstanding income tax return, and the company failed to submit the return within 21 business days of the date of issue of the final demand.

An extract of Section 211 of the Act is:

Fixed amount penalty table

211. (1) For the non-compliance referred to in section 210, SARS must impose a ‘penalty’ in accordance with the following Table:

The amount of the ‘penalty’ in column 3 will increase automatically by the same
amount for each month, or part thereof, that the person fails to remedy the
non-compliance.

Article – 29 October 2018 – FINCOR – Corporate Income Tax penalties – further info (pdf)

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